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Tuesday, August 10, 2010

Honda Motor Co plans to launch a plug-in hybrid and battery electric model in 2012 as part of its strategy to push to the front of a race by global automakers to develop more fuel-efficient cars.

Japan's No.2 automaker was one of the world's only car makers to offer gasoline-electric cars during the past decade but has begun looking like a laggard without a "strong" hybrid or concrete plans to mass-produce pure electric cars.

Global competitors from Volkswagen AG to Hyundai Motor Co are preparing to launch strong hybrid models that are more fuel-efficient than Honda's "mild" hybrids such as the Insight, while also readying battery-run cars.

At a news conference, Chief Executive Takanobu Ito, outlining the firm's medium-term strategy, said Honda was planning to sell a plug-in hybrid vehicle and a battery-powered electric model in Japan and the United States in 2012.

Japanese rival Toyota Motor Corp is planning to bring a plug-in hybrid to market in 2011 and recently formed an alliance with California start-up Tesla Motors to develop electric vehicles.

"Considering Toyota is set to launch a plug-in hybrid next year, Honda's 2012 schedule sounds a bit far off. This underscores the gap in the level of technology at these automakers," said Kazutaka Oshima, president of Rakuten Investment Management.

"That said, while Toyota has the lead, there really isn't anyone else who is as advanced as Toyota in this field and Honda appears to be close."

Asked about the walk-outs over the past two months at affiliated suppliers in China, the world's biggest auto market, Ito acknowledged that poor communication may have been at fault.

"It's possible that the dialogue between workers and our local management in China was lacking," he said, vowing to do better to prevent further disruption.

Executive Vice President Koichi Kondo said at the conference that Honda -- the single-biggest victim of China's recent labor disputes -- had lost production of less than 20,000 units from the strikes. He said Honda still planned to produce 632,200 vehicles in China this year by making up for the lost output.

Honda lost a few years in the green-car race after deciding in late 2008 to drop the development of clean diesel engines to power its bigger cars, opting instead to come up with a new, more powerful hybrid system that could be mounted on larger models.

Ito did not give an update on the new hybrid system, but said Honda would introduce "multiple" hybrid models in Japan within about a year using the existing technology.

Honda is looking to raise the ratio of hybrid vehicles to 10 percent or more of total production by 2015, from 5-6 percent now, Kondo said, rapidly boosting the percentage beyond 2015.

Honda had so far only announced plans to sell a battery-run electric car in the United States simply to meet legal requirements in California, arguing their batteries were too expensive to be practical.

Honda has been a strong proponent of hydrogen fuel-cell cars as the best zero-emission alternative to today's combustion engine cars, but their infrastructure hurdles are even bigger than for plug-in vehicles.

As part of its aim to reduce carbon dioxide emissions across all its products, Honda said it was also developing a new two-wheeler to compete in China's massive electric bicycle market, estimated at more than 20 million units a year.

Among other steps to lower carbon dioxide emissions, Honda plans to launch a new small diesel model in Europe in 2012 as well as revamp its gasoline engine and transmission line-up to improve fuel efficiency of its fleet.

With governments and consumers increasingly seeking to lower fuel consumption, Honda said it would further step up its development of microcars, moving production of some 660cc minivehicles back to its main Suzuka factory in Japan in 2012, from unit Yachiyo Industry.

"Through minivehicle production at Suzuka, we aim to hone manufacturing technologies that will contribute to the reduction of vehicle weight and costs for all future models," Ito said.

Honda also unveiled plans to build a new motorcycle factory in Indonesia in the latter half of 2011, boosting its annual output capacity by 500,000 units to 4 million in the world's third-largest motorcycle market.